In a Wall Street Journal editorial (subscription required) the two argue that any plan to tax internet sales needs to be simplified and states need to be on board.
The current state tax system is a morass of over 9,600 taxing jurisdictions. Many ZIP Codes cover multiple taxing entities. The Dallas-Fort Worth airport alone is in six separate taxing jurisdictions. In addition, the definition of taxable goods varies from jurisdiction to jurisdiction. In one, a Snickers bar is taxed as a candy, while in another it is taxed as a food because it contains peanuts.
Brick-and-mortar retailers do not have to deal with these complexities because they calculate sales where the cash register is located, not where the product is shipped or the purchaser resides. The checkout clerk at a Wal-Mart never asks the customer where she lives or where she will be wearing the dress she is purchasing.
The minimum simplifications of any federal law should include: (1) a single sales-tax rate in each state for any defined category of goods or services; (2) accountability to a single state tax audit authority; (3) a simple national standard for sourcing online sales; (4) nationally standardized definitions for taxable goods and services; and (5) a single tax filing in each state, not one for every one of 9,600 tax jurisdictions in the country.
This is precisely the kind of tax simplification that 24 states—including the Dakotas, Michigan, Ohio, Utah and West Virginia—implemented when they passed legislation conforming to the Streamlined Sales and Use Tax Agreement, an initiative started in 1999 by the National Governors Association and the National Conference of State Legislatures to simplify sales tax collection. Congress should require the remainder of the states to sign on if it is going enact a law to allow states to impose the burden of tax collection on online retailers.